Pension reform urged as self-employed and older workers increase

Industry professionals have called for reform in the way people save for retirement as the latest Office for National Statistics (ONS) showed an increase in self-employed and older workers.

The latest ONS figures on the UK labour market revealed that Q3 (July – September) 2019 saw the largest increase in self-employed workers since Q3 2016.

At the end of September 2019, there were 4.96 million self-employed workers, 195,000 more than the previous year.

“The self-employed now make up 15.1 per cent of the UK’s labour market and are growing at a faster annual rate than employees,” stated Aegon pensions director, Steven Cameron.

“The growth in the self-employed does not come without significant challenges, particularly when it comes to saving for retirement.

“There is a clear divide between employees enrolled into a workplace pension and the self-employed who do not benefit from auto-enrolment and the boosts to their retirement savings that come with this such as the employer contribution.

“Much more is needed to be done to address this inequality and make pension savings the ‘default’ for these workers.

Cameron noted that, despite the increase in self-employed workers, women still make up less than third of the total self-employed (1.64 million), while workers with an employer “is roughly a 50:50 split.”

The ONS figures revealed that the number of women in employment fell by 93,000 to 15.46 million during Q3 2019, while the number of men increased by 35,000 to 17.3 million during the same period.

Royal London pension specialist, Helen Morrissey, said that she hoped this was “a small blip in the overall upward trend”.

“Spending any time out of the workforce has a huge impact on women’s ability to build a strong financial future as they miss out on being able to build up a workplace pension through auto-enrolment,” she added.

Older workers were on the increase, according to the ONS, with the employment rate for those aged 50-64 increasing to 72.5 per cent and those aged 65+ rising to 10.9 per cent.

Research from Fidelity International found that more than half (52 per cent) of UK adults plan to work at least part-time during their retirement.

Furthermore, it found that 45 per cent of people expected to work into their 70s, while nearly one in 10 plan to work into their 80s.

Fidelity International director for workplace investing, Maike Currie, commented: “Today 60 is ‘the new 40’ and traditional retirement expectations are becoming outdated - this is changing the jobs market as we know it.

“As the baby boomers reach their 60s, their approach to this new phase of their working lives is likely to transform aging as we know it. Retirement planning will need to reflect this new reality.

“Retirement is changing, and that’s positive as long as money isn’t the driving factor. The solution lies in having a plan and knowing the amount you need to put away each month to continue the lifestyle that you want, whatever age you retire.”

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